Welcome to the new economic reality as the state steps in where private investors fear to tread

Name: Worldwide Covid-19 death toll surpasses 1 million
Uploaded: 2020-10-11T12:15:21.000Z
Duration: 6 min 3 s
Description: Worldwide Covid-19 death toll surpasses 1 million

Economic statism is growing as the world’s acute challenges, from the pandemic to climate change, prove too big for the private sector. Once confidence returns, so will private investment

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The emergency ward of Jawaharlal Nehru Medical College and Hospital in Bihar, India. The pandemic has dramatically increased the predicted burden (and funding shortfall) in areas such as health care, medicine and sanitation. Photo: Reuters

Anthony Rowley

Published: 8:15pm, 11 Oct 2020Updated: 8:41pm, 11 Oct 2020

The times, as singer Bob Dylan might say, are indeed a-changin’. Market forces are increasingly ceding the high ground to statism as a new economic reality favouring public over private enterprise takes hold in economies that had previously seen the state’s role as a “dead hand”.

To some extent, this is a case of force majeure as the Covid-19 pandemic has overwhelmed the ability of the private sector to cope, financially and logistically, with the impact of lockdowns and supply interruptions, forcing governments to step into economic activity on a grand scale.

But there is more to what is happening than simply a pandemic reaction. It marks a growing realisation that the acute challenges of our time, be it coping with health emergencies, warding off climate catastrophe or building infrastructure, are just too big for the private sector to manage.

Emblematic of this was the declaration by Yukio Edano, leader of Japan’s main opposition political force, the Constitutional Democratic Party of Japan, that it will break with the pro-private-sector neoliberal policies that have dictated economic policymaking for decades in and beyond Japan.

Likewise, a predicted “blue wave” of Democrat victories in US presidential and congressional elections would presage a shift towards public-sector initiatives (if not Bernie-Sanders-style socialism). Without embracing Chinese state capitalism, the United States and Japan appear to be shifting towards economic statism.

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Worldwide Covid-19 death toll surpasses 1 million

The need for such a shift in attitudes and ideologies towards public-sector initiatives was forcefully brought home by the outbreak of the Covid-19 epidemic. Economic activity all but collapsed around the world and only massive infusions of public money has staved off a depression (so far).

Welcome to the new economic reality as the state steps in where private investors fear to tread

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} Economic statism is growing as the world’s acute challenges, from the pandemic to climate change, prove too big for the private sector. Once confidence returns, so will private investment

Economic statism is growing as the world’s acute challenges, from the pandemic to climate change, prove too big for the private sector. Once confidence returns, so will private investment